How a Bad Case Of Group-Think May Be Preventing Amazon From Becoming the Only Retailer Shoppers Ever Use

A few months ago I finally made the plunge and bought Amazon Prime–their $79/year for free two day shipping on all purchases service. I made the purchase after doing some quick back of the napkin calculations that showed I was making purchases frequently enough from Amazon to where I was spending more on shipping annually than the Prime service cost. Such are the perks of eCommerce websites. The last decade has only preponderated the proliferation of eCommerce, and has seen a huge boom in many eCommerce websites. you can read more on that here to keep yourself updated.

Several months passed and my Amazon purchase frequency probably increased slightly. But it was one Sunday afternoon when things mentally came together and my families purchase habits changed such that we now make most of our purchases—both those formerly made offline and on—with Amazon.

I had just finished paying the bills and realized we were out of both stamps and envelopes. Ordinarily, that would be two separate stops for my busy wife during the week (she runs most of the errands in our family with me out of the house a lot between work and the commute). Then, I realized that what would have previously prevented us from mentally justifying making such a small purchase online versus physically in a store—the shipping costs—were no more. We made the purchases quickly and easily on Amazon and celebrated the time and hassle we had managed to slice out of her upcoming week.

Now, events like this have become regular in our household. Smallish purchases that would otherwise have been made in a brick and mortar store because we did not want to pay the extra shipping are now made on Amazon without a second thought. While I wouldn’t go so far as to call it life changing, it certainly has saved us both time and hassle. For Amazon, they have earned far more of our business and created positive associations with their brand.

Missed Opportunity

But here’s the thing that Amazon is missing out on. I sort of stumbled into buying Prime because I finally decided it was fiscally irresponsible to continue to pay the shipping costs when technically the math worked out to more without Prime. That’s a mathematics choice, and while it may have been the fiscally responsible one, it’s a bad motivator to compel consumers to make a purchase (just ask any insurance salesman).

It took actually having the service and the light bulb going off to make the connection to how significant a lifestyle change Prime was. I found it by accident. I might be really dense but I suspect that there are plenty of others out there that might come across Prime and not make that same connection between purchasing Prime and a positive lifestyle change (a highly scientific and rigorous research study of work colleagues at the lunch table the other day suggests this is the case).

So Amazon has this lifestyle-changer in Prime, but they are not doing enough to communicate it to consumers. In fact, they are currently devoting far more front page real estate to pushing an Amazon credit card than they are to Prime that, once purchased, could turn the buyer into a consumer who turns to Amazon for virtually all their shopping needs.

And, notice how they simply ‘state the facts’ about the Prime service on this landing page rather than communicating how it could be a positive life-style changer:

If we were to speculate about why Amazon is not doing more to flood consumers with messaging about how Prime could be a lifestyle changer (and admittedly, it is speculation) perhaps their Marketing people are suffering from a case of groupthink, where being in the situation they clearly make the mental connection between ‘Free Two Day Shipping’ and ‘lifestyle change’ and therefore assume that everyone else does easily makes the same mental connection.

Nothing Less Than Consumer’s Future Buying Habits at Stake

Why does any of this matter? Because there’s a tremendous amount at stake, more and more with each quarter that goes by. Comscore puts e-commerce spending at $41B ($49B during last year’s holiday season) 33% more than only a few short years ago in 2007 (and, this does not take into account the $’s that would arguably shift from households’ brick and mortar purchases to Amazon once they acquire Prime).

Given what’s at stake and how powerful a change removal of the shipping costs barrier would be for many households’ shipping habits, this is an area of focus that requires substantial mindshare for any retailer jockeying for position in the online shopping space.

As such and given that the lifestyle change Prime would bring is a concept better explained in a medium more expressive than a small square on their home page, Amazon should create television advertisements that message this to consumers, showing how Prime is about more than just saving on shipping for what you currently order, establishing the mental link for consumers between purchasing Prime and a positive lifestyle change. Similar messaging (much more than the current miniscule ‘Join Prime’ directive on the Amazon logo) should be mixed into current web properties. (Although in their early years they grew organically via word of mouth, Amazon demonstrated a willingness to invest in television advertisements with their recent Kindle tablet launches. Arguably, there is more at stake and a higher probability of consumer impact by advertising here rather than in the tablet space).

Amazon’s Loss Could Be Walmart, Targets Gain

If Amazon doesn’t go after the opportunity full bore, Walmart or Target should jump on it, create their own version of Prime, advertise the crap out of it even while sweetening the pot for consumers by also leveraging their physical locations into the service somehow. Arguments that they would be cannabilizing profits from their physical locations by also now incurring shipping costs they would otherwise not have for in-store purchases are both short-sighted and moot because if the massive growth in e-commerce chart above of the shows anything it’s that consumer purchasing habits are already moving—no, rushing—online. And, even a moment of reflection about the convenience online purchasing brings busy modern day consumers and the implications an always-connected smartphone in my pocket will continue to bring to online purchase habits, taken together, these facts point to only one thing: it is happening anyway (commerce moving online), so either retailers act now to make a play at becoming *the* retailer consumer move to or be left to fight over the remaining scraps. To be sure, it will take serious cojones for a Walmart or Target to make such a leap, but it’s the bold companies that recognize the way industry is changing and have the wherewithal to adapt that are left standing in the wake of major consumer behavioral changes.

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About the Author
Nathan Safran is a former Analyst at Forrester Research where he covered the Digital Home. While at Forrester, Nathan authored research studies on trends, attitudes and behaviors of consumers toward technology adoption and use.

Nathan has been quoted as a subject matter expert in publications such as the Wall Street Journal, USA Today and Fortune magazine. Currently, Nathan heads the Research Department at Conductor, Inc an SEO Technology Platform firm.